Cabo Verde’s 2014 budget poses risks for growth, IMF says

29 January 2014

Cabo Verde’s (Cape Verde’s) 2014 State Budget is based on high levels of public debt and puts growth at risk, the International Monetary Fund (IMF) said recommending that the government be prudent in its spending.

At the end of another assessment mission, the IMF team recommended that the Cape Verdean government take a moderate approach to its expenditure in 2014 and adopt a budget consolidation programme that is more ambitious in the medium term.

“It is necessary to reduce the growth of current account expenses and adopt a slightly less ambitious public investment programme. It is advisable carefully to analyse public projects so as to ensure that they will produce a higher return,” advised Andrea Richter Hume, the head of the IMF mission that was in Cabo Verde from 15 January.

Advising the Cabo Verde government to protect social costs with more vulnerable segments of the population, the head of the mission said it was important to boost the quality and efficiency of the public investments underway.

During its time on the archipelago the mission met with the Finance Minister, the governor of the Bank of Cabo Verde, other Government officials and representatives of civil society, and concluded that in 2013 the Cape Verdean economy stagnated, which contributed to slow credit growth and high unemployment.

The IMF mission found that the tourism sector was in “good health” and was expected to see slight growth in 2014. (macauhub)